PDX’s ROBIN HOOD tale

[September 26th, 2007]

Robin Hood is alive and well in Portland—although a self-interested sheriff is in hot pursuit.

On Sept. 25, City Commissioner Erik Sten unveiled a plan that would divert $20 million to $30 million in property taxes from ritzy Pearl District condos to build a new, badly needed elementary school in the David Douglas district—the city’s poorest, most-crowded school district.

“This is an idea we should have thought of a long time ago,” says Sten, minus only a band of tights-wearing merry men. “If we’re successful, we can bring disparate parts of the city together and make sure Portlanders share more equally in the benefits of urban renewal.”

The Sheriff of Nottingham in this tale is the Portland Business Alliance, which WW has learned opposes the idea because it says urban-renewal dollars must stay in the neighborhood that generated them.

Over the past decade, the Pearl has thrived due in large part to what’s called “tax-increment financing.” It allows the city to borrow money today against future property-tax revenues in a specific area to pay for infrastructure such as roads, sewers, parking and streetcar lines.

Such publicly financed infrastructure created the conditions for explosive condo growth in the Pearl. In fact, the so-called River District Urban Renewal Area has been so successful in generating new tax revenues that the Portland Development Commission’s number-crunchers forecast there could be as much as $500 million in untapped borrowing capacity in the district.

Over the past year, Sten and PDC Commissioner Charles Wilhoite have led a committee that is studying what to do with three urban renewal districts in the central city—the River District, the Downtown Waterfront and South Park Blocks.

Depending on one’s point of view, Portland’s 11 urban-renewal areas are bottomless troughs for developers or sources of revenue for badly needed public projects, such as a proposed new Multnomah County courthouse, that politicians couldn’t fund otherwise.

Sten and his staff have focused on addressing two intractable and seemingly related problems: the shortage of affordable housing and dwindling enrollment in the city’s public schools.

As Portland housing prices have soared, families of young children have fled the central city for more affordable housing on the east side. (According to U.S. Census data, about one in six Pearl households has children, which is half the rate of the city as a whole.) That has put pressure on eastside school districts, such as David Douglas, where 69 percent of kids qualify for free and reduced-price lunches, the most widely recognized measure of student poverty (in Portland Public Schools, the number is 45 percent).

To ease overcrowding, David Douglas put a $45 million capital bond measure on the ballot last November. David Douglas asked district residents to increase their taxes to build a new elementary school and to expand existing buildings for a district whose enrollment has grown more than 25 percent since 2000 (while PPS’s enrollment has declined 13 percent). The measure failed 55 percent to 45 percent.

Copying the model of the new Rosa Parks Elementary in North Portland, Sten proposes constructing a combined elementary school/community center for David Douglas.

“These are Portland school kids with nowhere to sit,” Sten says. “And this is a part of the city that is historically underserved.”

Sten says he’s received a warm reception when he’s briefed fellow City Council members and PDC commissioners about using Pearl District tax money to help David Douglas.

But the Portland Business Alliance, the powerful 1,300-member group that is dominated by downtown property interests and employers, doesn’t want to see money flowing from the Pearl to the east side.

Although a PBA spokeswoman declined to comment on Sten’s proposal, WW obtained an eight-page PBA analysis of the project that could be summarized in two words: “Hell no.”

“We recommend that non-contiguous boundaries not be allowed,” says the PBA report, which was written earlier this month.

There are a couple of problems with that argument. First, creating an urban-renewal district freezes its tax base for the life of the district. And new taxes created are used for the district’s exclusive benefit. So while population in the Pearl has exploded over the past decade, residents of the rest of the city—including citizens east of 82nd Avenue—have shouldered the additional cost of basic services such as police and fire for the new Pearl residents.

There’s an even greater irony to the PBA’s objection: Three years ago, when the city considered the precedent-setting creation of the Willamette Industrial Urban Renewal Area, a key consideration was that the two halves of the district would be split by the Willamette River—i.e., the district wasn’t contiguous. The PBA enthusiastically supported the proposal anyway.

Sten’s plan is still in its early stages and unlikely to come to council before early next year.

But Homer Williams, the developer most associated with the Pearl’s success, likes the plan—despite representing the group (developers) that loses most under Sten’s proposal.

Says Williams: “Seems like a good idea to me.”